More Insider Selling at Strong Performing Ethanol Company, Plus 4 Other Notable Insider Transactions

A somewhat recent study on insider trading shows that there is a great deal of predictable ‘routine’ insider trading that is not informative as far as the future success of firms goes. The research study essentially divides the insider trading universe into two halves, with around 44% of all trades considered ‘opportunistic’ and the remaining 56% of all trades seen as ‘routine’. The set of information-rich ‘opportunistic’ trades, which simply refers to the non-routine kind of insider trading, is shown to have significant predictive power for future firm-specific news, events and returns.

Without having prior knowledge of this research study, Insider Monkey has been following a similar approach when selecting the insider transactions to be discussed in our daily insider trading articles. The Insider Monkey team ignores the insider trading conducted under pre-arranged trading plans, which can clearly be identified as routine insider trading, as well as ignoring insider transactions related to freshly-exercised options, as corporate insiders almost always cash out newly-exercised stock options, a set of insider transactions that also falls into the category of routine insider trading. By ignoring the routine kind of insider transactions, which usually tend to send uninformative signals, we deliver only the information-rich set of trades that can assist investors in their stock selection and analysis process. With that being said, let’s have a look at a set of non-routine insider transactions reported with the SEC on Thursday.

Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Board Member of Closed-End Investment Company Buys Shares at Discount

Let’s kick off our discussion by analyzing the recent insider buying activity at Central Securities Corp. (NYSEMKT:CET). Leo Price Blackford, Lead Independent Director since late-May of 2012, purchased 7,500 shares on Wednesday at a price of $21.49 per share. Following the recent purchase, Mr. Blackford currently owns 18,490 shares.

Central Securities Corp. (NYSEMKT:CET) operates as a closed-end investment company that mainly invests in common stocks, as well as bonds, convertible bonds, preferred stocks, convertible preferred stocks, and warrants, to name just a few. The company’s net assets per common share totaled $26.05 on September 23, while that day’s closing share price was $21.08. This implies a discount of around 19%, which possibly explains the reason behind Mr. Blackford’s purchase. Activist hedge fund firm Bulldog Investors reported ownership of approximately 138,000 shares of Central Securities Corp. (NYSEMKT:CET) in its 13F for the June quarter.

The next two pages of this insider trading article will discuss several other insider transactions reported to the SEC on Thursday.

Board Member of CDI Boosts Ownership Stake

A member of CDI Corp. (NYSE:CDI)’s Board of Directors also snapped up some shares of his company this week. Board member Albert E. Smith bought 8,000 shares on Tuesday at $5.40 apiece, boosting his overall holding to 69,271 shares.

The provider of engineering and technology solutions, and professional staffing services has seen the value of its shares plunge by 14% since the start of the year. CDI Corp. (NYSE:CDI) reported revenue of $226.69 million for the second quarter, marking a decrease of 8.2% year-over-year due to lower revenue from enterprise talent and engineering solutions. The company’s enterprise talent revenue fell due to reduced staffing at a large information technology client, as well as reduced UK staffing revenue, reduced Canadian pipeline staffing, and foreign currency headwinds. Just recently, CDI announced the sale of its UK-based subsidiary, CDI AndersElite Ltd., to the Anders management team and employees. Anders provides staffing and recruitment services to firms in the UK built environment and rail industries. Jim Simons’ Renaissance Technologies was the owner of 629,300 shares of CDI Corp. (NYSE:CDI) at the end of June.

Executive at Largest Title Insurance Provider Sells Shares

One member of FNF Group of Fidelity National Financial Inc. (NYSE:FNF)’s executive team has offloaded two blocks of shares in the past two weeks. Peter T. Sadowski, Executive Vice President and Chief Legal Officer, discarded 34,191 shares on Wednesday at prices ranging from $37.40 to $37.50 per share, as well after selling 15,809 shares last Thursday at prices that fell between $37.50 and $37.74 per share. Following these transactions, Mr. Sadowski currently owns a direct ownership stake of 65,715 shares.

The shares of the largest title insurance provider in the United States are 8% in the green thus far in 2016. FNF Group of Fidelity National Financial Inc. (NYSE:FNF) also stands as the majority owner of Black Knight Financial Services Inc. (NYSE:BKFS), a fast-growing provider of cloud-based tech software to the nation’s largest mortgage servicers. Bulls argue that FNF deserves a much higher valuation because of its majority stake in Black Knight, with analysts anticipating that the company will spin-off its remaining stake in Black Knight in 2017. Richard Barrera’s Roystone Capital Partners acquired a new stake of 2.24 million shares of FNF Group of Fidelity National Financial Inc. (NYSE:FNF) during the April-to-June quarter.

The final page of this article will discuss the fresh insider selling activity at two other companies.

Director at Growing Data Storage Provider Unloads Shares

One member of NetApp Inc. (NASDAQ:NTAP)’s Board of Directors significantly reduced his ownership stake this week. Board member Robert T. Wall liquidated 22,944 shares on Tuesday at prices varying from $35.32 to $35.61 per share. After the recent sale, Mr. Wall currently holds an ownership stake of 36,048 shares.

The global provider of software, systems and services to manage and store customer data has seen its market capitalization jump by 33% since the start of the year. Earlier this week, analysts at Jefferies raised their price target on NetApp Inc. (NASDAQ:NTAP) to $34 from $29 while maintaining their ‘Hold’ rating on the stock, saying that the data storage service provider was “upbeat and proud of recent accomplishments” at a recently-held investor meeting. NetApp said at the conference that the company represents the second-largest market leader in the all-flash array market, as well as represents the fastest-growing storage area network provider. However, Jefferies analysts say that they “don’t find the valuation particularly compelling and are inclined to look for another entry point.” Ray Dalio’s Bridgewater Associates reported owning around 445,000 shares of NetApp Inc. (NASDAQ:NTAP) during the second-quarter 13F reporting period.

More Insider Selling at Ethanol Company

A Board member of REX American Resources Corp (NYSE:REX) also offloaded a block of shares this week. Lawrence Tomchin discarded 2,000 shares on Monday at an average price of $84.54 per share and 4,000 shares on Wednesday for $84.00 each. After the recent transactions, Mr. Tomchin currently owns 138,380 shares of REX American Resources. This wave of insider selling comes shortly after the company’s founder sold a 13,562-share block last Wednesday.

The shares of the ethanol company are 55% in the green this year. REX American Resources Corp (NYSE:REX)’s net sales for the quarter that ended July 31 totaled $115.7 million, up from $113.5 million reported a year earlier. Meanwhile, ethanol sales jumped to $90.9 million from $87.0 million, reflecting an increase of 3 million gallons sold. However, dried distillers grains sales decreased to $18.9 million from $21.6 million, mainly due to a $34.50 decline in the price per ton sold. The decrease in the selling price is believed to reflect uncertainty around ongoing anti-dumping and countervailing duty investigations of U.S. dried distillers grains exports to China conducted by the China Ministry of Commerce. Renaissance Technologies owns 526,400 shares of REX American Resources Corp (NYSE:REX) as of June 30.

Disclosure: None